VBTC Vubotics Inc (CE)

*The above information regarding common stock to be outstanding after the offering is based on 52,773,718 shares of common stock outstanding as of November 5, 2007 and assumes the exercise of all warrants, and conversion of all of our senior, secured convertible notes included in this prospectus.

2007 Financing Transaction

On August 28, 2007, the Company entered into a Securities Purchase Agreement (the “2007 Securities Purchase Agreement”) with the purchasers thereunder and a collateral agent pursuant to which the Company sold (i) senior, secured convertible notes in the aggregate principal amount of $1,440,000 (the “2007 Notes”) and five-year warrants to purchase up to 21,920,833 shares of the Company’s common stock (the “2007 Warrants”).

The 2007 Notes mature on March 28, 2008, unless extended by mutual agreement of the Company and the note holders. Either the Company or the note holders may elect to convert all or a portion of the outstanding principal and/or interest under the 2007 Notes at any time prior to repayment. The holders of the 2007 Notes may convert 83.33% of any amounts outstanding under the 2007 Notes at any time into shares of our common stock at a fixed conversion price per share of $0.10. We may convert 83.33% of any amounts of principal outstanding under the 2007 Notes at any time prior to repayment at a conversion price of per share $0.10 if the volume weighted average price of our common stock on the OTC Bulletin over any 10 consecutive trading days is $.60 or more per share. Our obligations under the 2007 Securities Purchase Agreement are secured by substantially all of our assets pursuant to a Security Agreement dated August 28, 2007 between the Company and the collateral agent.

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The 2007 Warrants are exercisable at a price of $0.20 per share.

In connection with the 2007 Securities Purchase Agreement, we also entered into a registration rights agreement (the “2007 Registration Rights Agreement”) with the purchasers thereunder providing for the filing of a registration statement with the Securities and Exchange Commission (the “Commission”) registering the common stock issuable upon conversion of the 2007 Notes and the exercise of the 2007 Warrants (subject to the registration volume limitations of Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). We have satisfied our obligation to cause the registration statement to be filed. In the event of a default of our other obligations under the 2007 Registration Rights Agreement, including if the registration statement is not declared effective within 90 days of filing (120 days if the registration statement is reviewed by the Commission), we are required to pay to the purchasers thereunder, as liquidated damages, for each month that the registration statement is not filed or declared effective, as the case may be, equal to 1.5% of the each holder’s subscription price (subject to a cap of 18% of such holder’s subscription price).

As a result of these factors, we will need to raise additional funds, and these funds may not be available on favorable terms, or at all. Furthermore, if we issue equity or debt securities to raise additional funds, our existing shareholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing shareholders. In addition, if we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable prioprietary rights to our  products or proprietary technologies, or grant licenses on terms that are not favorable to us. If we cannot raise funds on acceptable terms, we may not be able to develop or enhance the Company’s products, execute the Company’s business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements. Any of these events could be materially harmful to our business and may result in a lower share price and could cause us to cease operations altogether.

If the VuIT™ reader fails to be accepted in the market or we fail to develop additional products, we will not achieve significant revenues and would be unlikely to be able to continue our current level of operations and would be unable to meet our long-term growth plans.

The VuIT™ reader employs new technology for improving the usability of handheld devices by focusing on the human-machine interface. VuBotics has no existing customer base which poses a risk that customers will not adapt to this technology. Our future business and financial success depends on the market’s acceptance of the VuIT™ reader and our ability to introduce new products and upgrade existing products into the marketplace. We cannot assure investors in our common stock that the VuIT™ reader will achieve market acceptance. The failure of the VuIT™ reader to gain market acceptance would severely harm our business, financial condition and results of operations. Also, there is a long sales cycle associated with the technology. In addition, developing new products and upgrades to existing and future products imposes burdens on our management. This process is costly, and we cannot assure any investor that we will be able to successfully develop any products or enhance any future products. If our product development efforts are unsuccessful, we will have incurred significant costs without recognizing the expected benefits and our business prospects may suffer.

The report of our independent auditors includes a going concern uncertainty explanatory paragraph for the year ended December 31, 2006, which means that we may not be able to continue operations unless we can become profitable or obtain additional funding.

We have a history of operating losses that are likely to continue in the future. Our auditors have included an uncertainty explanatory paragraph in their Independent Auditor’s Report included in our audited financial statements for the years ended December 31, 2006 and December 31, 2005 to the effect that our recurring losses from operations and working capital deficiency raise substantial doubt about our ability to continue as a going concern.

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Our financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. We expect to be able to continue operations through the first quarter of 2008 with the cash currently on hand and anticipated from our operations. We cannot give assurances that our business operations will develop and provide us with significant cash to continue operations.

Potential strategic partners and customers may refuse to do business with us due to our weak financial condition.

Our future business and financial success depends on our ability to enter into beneficial relationship with strategic partners and licensing relationships with customers. However, because we have a history of operating losses, our financial condition is weak and potential strategic partners and customers may be reluctant to do business with us, and our business prospects may suffer, which could hinder our ability to generate revenues.

Risks Related To Our Business and Operations

We are involved in litigation that may require us to pay monetary damages and/or provide a third party with a license to certain intellectual property.

On February 6, 2007, we were served with a complaint which had been filed on January 29, 2007 in the Superior Court of Fulton County, Georgia by Ekistics Research, LLC (“Ekistics”) and Craig J. Larson, a former director and officer of the Company, against us and VuBotics Georgia, Inc. The complaint alleged, among other things, that we breached our obligation to provide up to $500,000 for working capital, software development, inventory purchases and promotion of the QuantumReader software during the 12-month period after our acquisition of QuantumReader, Inc. (now our wholly owned subsidiary) under the Plan and Agreement of Reorganization dated November 17, 2004 among us, Mr. Larson and others. The plaintiffs were seeking monetary damages, as well as an injunction requiring us to provide Mr. Larson with a non-exclusive, worldwide, perpetual, irrevocable, paid-up license to the QuantumReader software. In March, 2007, Ekistics Research, LLC and Mr. Larson withdrew the complaint.

On September 4, 2007, Ekistics and Mr. Larson refiled their complaint against us and certain other parties in the Superior Court of Fulton County, Georgia.  This complaint is similar to the previous complaint that Mr. Larson and Ekistics filed and withdrew earlier this year.  In the second complaint, the plaintiffs are seeking monetary damages, as well as an order declaring Mr. Larson the owner of a patent application that was the principal asset of QuantumReader, Inc. when it was acquired by us and an injunction against us.  At this time, our management believes that the lawsuit is without merit, and we intend to show, among other defenses, that we made available well in excess of $500,000 during the requisite time period in 2004 and 2005. On October 4, 2007, QuantumReader, Inc. filed a motion to intervene in the lawsuit along with pleadings asserting numerous claims against Mr. Larson, including that he has willfully interfered with QuantumReader, Inc.’s intellectual property.  In addition, QuantumReader, Inc. filed a motion for a preliminary injunction asking the court to immediately prohibit Mr. Larson from further interfering with QuantumReader, Inc.’s intellectual property. This litigation may be costly or unsuccessful. Due to the inherent uncertainties in litigation, and because the ultimate resolution of the proceeding is influenced by factors outside of our control, the ultimate outcome of this proceeding is uncertain and unpredictable.

If we fail to protect our intellectual property rights, others may take advantage of our ideas and compete directly against us.

We rely in part on pending patent applications, trade secrets, registered and unregistered trademarks and other intellectual property rights to protect our products. We may not be able to obtain or maintain adequate patent protection for new products or ideas in the United States or in Europe, or prevent the unauthorized disclosure of our technical knowledge or other trade secrets by our employees and third parties. In addition, the laws of foreign countries may not protect our intellectual property rights to the same extent as the laws of the U.S.  Even if our intellectual property rights are adequately protected, litigation may be necessary to enforce them, which could result in substantial costs to us and substantial diversion of the attention of our management and key technical employees. Litigation and other proceedings relating to intellectual property matters, whether initiated by us or a third party, can be expensive and time consuming, regardless of whether the outcome is favorable to us or not, and may require the

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diversion of substantial amounts of our financial, managerial and other resources. An adverse outcome could subject us to significant liabilities to third parties or require us to cease any related development, product sales or commercialization activities.

In addition, if patents that contain dominating or conflicting claims have been or are subsequently issued to others, and the claims of these patents are ultimately determined to be valid, we may be required to obtain licenses under patents of others in order to develop, copy, import and/or license our products. We may not be able to obtain licenses under any of these patents on terms acceptable to us. If we do not obtain these licenses, we could encounter delays in, or be prevented entirely from using, importing, developing, manufacturing, offering or selling any of our products or practicing any methods, or delivering any services requiring such licenses.

If we are unable to adequately protect our intellectual property, our competitors could use our proprietary ideas and technology to develop new products or enhance their existing products. Similarly, if our competitors are able to acquire intellectual property rights to exclude us from certain activities or market segments, then our ability to market and sell our products may be impaired. These events could harm our competitive position, decrease our market share or otherwise harm our business.

If we are not able to protect our trade secrets through enforcement of our confidentiality and non-competition agreements, then we may not be able to compete effectively and may not be profitable.

We attempt to protect our trade secrets, including the processes, concepts, ideas and documentation associated with the VuIT™ reader and our other technologies, through the use of confidentiality agreements and non-competition agreements with our current employees, officers and with other parties to whom we have divulged such trade secrets, or whom have been privy to such trade secrets through their association with us. If our employees, officers or other parties breach the confidentiality agreements and non-competition agreements they have with us, or if these agreements are not sufficient to protect our technology or are found to be unenforceable, our competitors could acquire and use information that it considers to be its trade secrets.

Our product licenses and joint marketing agreements have a long sales and implementation cycle, which makes it difficult to predict our quarterly results and may cause our operating results to vary significantly.

The period between initial contact with a prospective customer or joint marketing partner and the grant of the initial end user license, entering into of a resale or joint marketing arrangement is unpredictable and often lengthy. Thus, revenue and cash receipts could vary significantly from quarter to quarter. Any delay in the implementation of our products could cause reductions in our revenues. The implementation of our products involves significant commitment of technical and financial resources and is commonly associated with substantial implementation efforts that may be performed by us, by the customer or by third-party system integrators. If we underestimate the resources required to meet the expectations we have set for our products, it could have an adverse affect on our results of operations.

Our vendors may stop working with us and/or seek damages because they have not been paid.

We depend on a number of vendors to deliver good and services to us in connection with our business. However, because we are operating at a loss, we sometimes pay our vendors late or have to enter into alternative payment arrangements with our vendors. If our vendors do not agree to accept such late payments or alternative payment arrangements, they may stop delivering their goods and services and our ability to operate may be severely impacted.

Our success will depend on our ability to attract and retain key personnel. If we fail to attract and retain key personnel and programming staff, we may be unable to succeed in its market.

We believe our future success will depend on our ability to manage our growth successfully, including attracting and retaining highly skilled personnel. Our key employees may terminate their employment with us at any time. We must continue to hire highly skilled personnel. Recruiting, attracting and retaining qualified management and

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technical personnel is difficult due to the limited number of qualified professionals. If we fail to attract and retain personnel, particularly management and technical personnel, we may not be able to succeed.

We depend on our management and the loss of any of our key executive officers could adversely affect us.

Our future success will depend to a large extent on the continued contributions of our executive officers and other members of management. While we plan to enter into service agreements with certain executive officers, our executive officers and other members of management may terminate their service with us at any time. If, for some reason, the services of management, or of any member of management, were no longer available to us, especially without advance notice, our operations and proposed businesses and endeavors may be materially adversely affected. The loss of any of our key executive officers may adversely affect us. Any failure of management to implement and manage our business strategy and growth may have a material adverse affect on us.

We will need to increase the size of our organization, and may experience difficulties in managing growth.

We are a small company with minimal personnel as of November 1, 2007. We expect to experience a period of significant expansion in headcount, facilities, infrastructure and overhead and anticipate that further expansion will be required to address potential growth and market opportunities. Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional personnel, whether they be independent contractors or employees. Our future financial performance and our ability to compete effectively will depend, in part, on our ability to effectively manage future growth.

We need to establish and maintain strategic distribution partners and licensing relationships.

Our success will depend in part upon our ability to establish and maintain strategic distribution partners and licensing relationships with other companies. There can be no assurance that we will be able to maintain our existing relationships or enter into beneficial relationships in the future. There can be no assurance that our current and potential future strategic partners and licensees will not develop or pursue alternative technologies either on their own or in collaboration with others, including with our competitors. The failure of any of our current or future collaboration efforts could have a material adverse effect on our ability to market and license our existing products or to introduce new products or applications and therefore could have a material adverse effect on our business, financial condition and results of operations.

We are subject to compliance with securities laws, which expose us to potential liabilities, including potential rescission rights.

We have periodically offered and sold our common stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act, as well as those of various state securities laws. The basis for relying on such exemptions is factual, and the applicability of such exemptions depends on our conduct and that of those persons contacting prospective investors and making the offering. We have not received a legal opinion to the effect that any of our prior offerings were exempt from registration under any federal or state law. Instead, we have relied upon the operative facts as the basis for such exemptions, including information provided by investors themselves.

If any prior offering did not qualify for such exemption, an investor may have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be offered without registration in reliance on the partial preemption from the registration or qualification provisions of such state statutes under the National Securities Markets Improvement Act of 1996. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which it has relied, we may become subject to significant fines and penalties imposed by the SEC and state securities agencies.

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Risks Related to the 2007 Securities Offering

We are registering a large number of shares underlying the notes and warrants and the sale of these shares may depress the market price for our common stock.

As of November 10, 2007, we had 52,773,718 shares of our common stock issued and outstanding. In connection with the 2007 Securities Purchase Agreement, we issued senior, secured convertible notes in the aggregate amount of $1,440,000 which are convertible into 14,524,428 shares of our common stock. We also issued warrants to purchase 21,920,833 shares of our common stock to purchasers under the 2007 Securities Purchase Agreement. Under Rule 144 of the Securities Act, any shares issued under the 2007 Securities Purchase Agreement may be freely resold following a one year holding period, whether such shares are registered under this registration statement or not. The SEC recently approved amendments to Rule 144 which will shorten the requisite holding period to six months. The Rule 144 amendment will take effect sixty days following their final publication in the Federal Register. The simultaneous sale of these shares may adversely affect the market price of our common stock.

If we are required for any reason to repay the outstanding 2007 senior, secured convertible notes, we would be required to deplete our working capital, if available, or raise additional funds, and our failure to repay the 2007 secured convertible notes, if required, could result in the note holders or their collateral agent taking possession of our assets and disposing of them by public or private sales.

Under the 2007 Securities Purchase Agreement, we sold $1,440,000 of senior, secured convertible notes. These notes are due in payable on March 28, 2008, unless extended or sooner converted into shares of our common stock. Our failure to repay the principal amounts thereunder, and/or any interest, when due, or our failure to issue shares of our common stock upon conversion thereof, could require the early repayment of the convertible notes. If we are required to repay the convertible notes, we would be required to use our limited working capital and raise additional funds.

In connection with the 2007 Securities Purchase Agreement, we entered into the 2007 Security Agreement with the investors thereunder granting them a first priority security interest in all of our goods, inventory, contractual rights and general intangibles, receivables, intellectual property and other assets. If an event of default occurs under the Security Agreement or any of the 2007 senior, secured convertible notes or we fail to pay when due any other indebtedness of ours to any 2007 Purchaser and fail to cure such default within 30 days following written demand by the collateral agent, the 2007 Security Agreement entitles the investors have the right to take possession of such collateral to satisfy our obligations under these agreements.

Risks Related to the Company’s Common Stock and Its Market Value

The Company is currently authorized to issue up to 100,000,000 shares of common stock and has approximately 52,773, 318 shares issued and outstanding. Any additional issuances could lead to dilution of the ownership interest of investors.

We are currently authorized to issue up to 100,000,000 shares of common stock and 25,000,000 shares of preferred stock. As of November 5, 2007 there were 52,773,718 shares of common stock issued and outstanding. The Company will need to raise additional funds in the future through the issuance of equity, equity-related or convertible debt securities, the additional issuances of which could lead the holders of its common stock to experience additional dilution. If purchasers of our warrants exercise such warrants via “cashless exercise,” such issuances would cause our shareholders to experience dilution.

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There is no assurance of an established public trading market, which would adversely affect the ability of investors in our company to sell their securities in the public markets.

Although our common stock trades on the Over-the-Counter Bulletin Board (the “OTCBB”), it is thinly traded, thereby limiting liquidation without the risk of downward pressure on prices. In addition, there is no assurance that a regular trading market for the securities will be established or sustained in the future. The NASD has enacted recent changes that limit quotations on the OTCBB to securities of issuers that are current in their reports filed with the Securities and Exchange Commission. The effect on the OTCBB of these rule changes and other proposed changes cannot be determined at this time. The OTCBB is an inter-dealer, Over-The-Counter market that provides significantly less liquidity than the NASD’s automated quotation system (the “NASDAQ Stock Market”). Quotes for stocks included on the OTCBB are not listed in the financial sections of newspapers as are those for The Nasdaq Stock Market. Therefore, prices for securities traded solely on the OTCBB may be difficult to obtain and holders of common stock may be unable to resell their securities at or near their original offering price or at any price. Market prices for our common stock will be influenced by a number of factors, including:

The limited prior public market and trading market may cause volatility in the market price of our common stock.

Our common stock is currently traded on a limited basis on the OTCBB under the symbol “VBTC.OB” The quotation of our common stock on the OTCBB does not assure that a meaningful, consistent and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many small companies like us. Our common stock is thus subject to volatility. In the absence of an active trading market:

•                                           investors may have difficulty buying and selling or obtaining market quotations;

•                                           market visibility for our common stock may be limited; and

•                                           a lack of visibility for our common stock may have a depressive effect on the market for our common stock.

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Our stock price has historically been volatile and the future market price for our common stock may continue to be volatile. Further, the limited market for our shares will make our price more volatile. This may make it difficult for you to sell our common stock for a positive return on your investment.

The public market for our common stock has historically been very volatile. From January 1, 2006 and through the fiscal quarter ended September 30, 2007, the closing market price for our common stock has ranged from $0.085 to $0.65. Any future market price for our shares may continue to be very volatile. This price volatility may make it more difficult for you to sell shares when you want at prices you find attractive. We do not know of any one particular factor that has caused volatility in our stock price. However, the stock market in general has experienced extreme price and volume fluctuations that often are unrelated or disproportionate to the operating performance of companies. Broad market factors and the investing public’s negative perception of our business may reduce our stock price, regardless of our operating performance. Market fluctuations and volatility, as well as general economic, market and political conditions, could reduce our market price. As a result, this may make it difficult or impossible for you to sell our common stock for a positive return on your investment.

The Company’s common stock may be considered a “penny stock” and may be difficult to sell.

To be considered to be a “penny stock,” securities must meet one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These include, but are not limited to, the following: (i) the stock trades at a price less than $5.00 per share; (ii) it is NOT traded on a “recognized” national exchange; (iii) it is NOT quoted on the NASDAQ Stock Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company with net tangible assets less than $2.0 million, if in business more than a continuous three years, or with average revenues of less than $6.0 million for the past three years. The principal effect of being designated a “penny stock” is that securities broker-dealers cannot recommend the stock but must trade in it on an unsolicited basis. Section 15(g) of the Exchange Act and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Potential investors in the Company’s common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.”

Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of the Company’s common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

Broker-dealers typically charge a higher commission on sales of penny stocks such as ours. Therefore, investors in our shares may find it more difficult to sell their shares to third parties and/or to realize as high a return on the resale of their investment as they might if the shares were listed on another national exchange.

Shares eligible for future sale may adversely affect the market price of our common stock, as the future sale of a substantial amount of our restricted stock in the public marketplace could reduce the price of our common stock.

From time to time, certain of our shareholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act (as amended, “Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a shareholder (or

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shareholders whose shares are aggregated) who has satisfied a one year holding period may freely resell their previously restricted shares (subject to applicable tolling periods). Any substantial sale of common stock pursuant to Rule 144 or pursuant to any resale prospectus may have an adverse effect on the market price of our securities. The SEC recently approved amendments to Rule 144 which will shorten the requisite holding period to six months. The Rule 144 amendment will take effect sixty days following their final publication in the Federal Register.

If the Company fails to maintain effective internal controls over financial reporting, the price of the Company’s common stock may be adversely affected.

Our internal controls over financial reporting may have weaknesses and conditions that need to be addressed, the disclosure of which may have an adverse impact on the price of our common stock. The failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. In addition, our management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal controls over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of the our common stock.

We do not anticipate paying cash dividends on our stock in the foreseeable future. The payment of dividends on our stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as the board of directors may consider relevant. If we do not pay dividends, our stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our shareholders sell substantial amounts of our common stock in the public market, including shares issued upon the exercise of outstanding options or warrants, the market price of our common stock could fall. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. Shareholders who have been previously issued shares in connection with any private offerings and/or private placements may sell their shares pursuant to Rule 144 under the Securities Act, beginning one year after the shareholders acquired their shares (subject to applicable tolling periods). The SEC recently approved an amendment to Rule 144 which will shorten the requisite holding period to six months; this amendment takes effect 60 days after its publication in the Federal Register.

As of November 12, 2007, there were approximately 541 holders of record of our common stock.

We have appointed Standard Registrar and Transfer Company, Inc., 12528 South 1840 East, Draper, Utah 84020, as transfer agent for our shares of common stock.

Equity Compensation Plan Information

We do not have an equity compensation plan pursuant to which we grant equity awards to executive officers or other persons.

The following table summarizes our equity compensation plan information as of November 12, 2007.

Forward-looking statements reflect management’s current expectations and are inherently uncertain.  Our actual results may differ significantly from management’s expectations. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors on which such statements are based include assumptions concerning uncertainties such as uncertainties associated with the following:

(a)                                   volatility or decline of our stock price;

(b)                                  potential fluctuation in quarterly results;

(c)                                   our failure to earn revenues or profits;

(d)                                  inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement its business plans;

(e)                                   inadequate capital to continue business;

(f)                                     changes in demand for our products and services;

(i)                                      insufficient revenues to cover operating costs.

There is no assurance that we will be profitable. We may not be able to successfully develop, manage or market our products and services. We may not be able to attract or retain qualified executives and technology personnel. Our products and services may become obsolete, government regulation may hinder our business. Additional dilution in outstanding stock ownership may be incurred due to the issuance of more shares, warrants and stock options, or the exercise of warrants and stock options, and other risks inherent in our businesses.

We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-QSB and Annual Report on Form 10-KSB filed by us in 2006 and 2007 and any Current Reports on From 8-K filed by us.

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future.  Such discussion represents only the best present assessment of our management.

Background and Business Overview

We were originally incorporated in 1996 in the state of Nevada as Silver Strike Mining Company, Inc. In 1999, we changed our name to Halifax International, Inc. In 2004, we changed our name to VuBotics, Inc. and acquired QuantumReader, Inc. In 2006, we reincorporated from Nevada to Georgia. We have two non-operating subsidiaries, QuantumReader, Inc., a Delaware corporation, and Truscom, a Japanese subsidiary.

VuBotics has now transitioned its core platform of patent pending concepts to products and services.  First quarter announcements for the VuIT™ reader eMail for BlackBerry demonstrates the Company’s resolve to deliver against a consumer and business enterprise plan.

While still early in revenue development, our licensing agreements in global markets with leading mobile software application distributors and enterprise clients mark a shift from pre-revenue to revenue stages.  Initial market

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reviews and paying customer feedback about the VuIT™ reader continue to validate and exceed expectations for technology product adoption.

The VuIT™ reader is a sequential word delivery engine that delivers streaming text in a cadence, or rhythm, similar to sub-vocalization and allows readers to consume text two to four times faster than average college educated readers.

That engine is the basis of a platform used to exploit markets in mobile and computer based eMail, mobile and computer based email attachments and documents, mobile messaging, mobile internet content and online content presentation, and providing metrics and relational advertising insertion.  In the mobile markets, the VuIT™ reader represents a unique business model for advertising sponsored video content and content presentation for mobile entertainment.

VuBotics continues to own operating subsidiaries in Delaware and Japan and plans to initiate UK/EU operations in the immediate future.  The construction of this world-wide business enterprise is designed to allow VuBotics to license and distribute its the VuIT™ reader platform throughout the world, in over 80 languages, maximize its IP protection, maintain proximity to markets and create the most efficient financial structures available within today’s complex regulatory environment.  VuBotics will be using this investment in structure as a repeatable means to continuously deliver new patented technologies into the global markets.

There can be no assurances that the projected potential applications of the VuIT™ reader will function in a way that will meet the Company’s product objectives or be accepted by the marketplace. See “Risk Factors.”  We are currently selling the VuIT™ reader by targeting domestic and foreign applications, including mobile phone email and attachment readers, computer based email and attachment readers, online server based readers, content readers with advertising, and broadcasting. Other commercial opportunities include education, military, and medical.

The Company is prosecuting ten patent applications and provisional patent applications for the VuIT™ reader and related methods of analysis, abstraction and delivery of electronic information in the United States and in Europe. There can be no assurances that any patents will be granted. See “Risk Factors.”

Critical Accounting Policies

The Company has nominal operating revenue. At such time as the Company has revenue, the Company intends to adopt such policies as revenue recognition and stock compensation.

Results Of Operations

Nine Months Ended September 30, 2007 Compared  to Nine Months Ended September  30, 2006

General. The following discussion and analysis explains trends in the Company’s financial condition and results of operations for the nine months ended September 30, 2007 and 2006. The consolidated financial statements and notes thereto, included as part of the financial statements, should be read in conjunction with these discussions.

The Company incurred a net loss for the nine months ended September 30, 2007 of $1,597,991. This compares to a loss of $1,649,086 for the same period in 2006, a decrease of $51,095. The decrease is primarily the result of lower operating expenses of $829,639 and lower interest expense of $34,225 during the nine months ended September 30, 2007 offset by a gain on debt restructure of $798,046 in the second quarter 2006.

Operating expenses decreased $829,639 to $1,609,082 from $2,438,721 during the same period in 2006. The decrease is primarily the result of a reduction in non-cash stock compensation offset by an increase of $73,484 in general and administrative expenses and marketing expenses of $65,013 during the nine months ended September 30, 2007. Non-cash stock compensation related to marketing and general and administrative was lower by $200,500 and $764,772, respectively during the nine months ended September 30, 2007, as compared to the same period in 2006. General and administrative expenses increased due to increased reporting and compliance costs.

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The Company recorded revenue of $25,272 for the nine months ended September 30, 2007 and $37,000 for the nine months ended September 30, 2006. These revenues were derived from a follow-on pilot project with a major media content provider and royalties from licenses of the VuIT™ reader email Reader.

Three months ended September 30, 2007 Compared to Three Months Ended September 30, 2006

General. The following discussion and analysis explains trends in the Company’s financial condition and results of operations for the three months ended September 30, 2007 and 2006. The consolidated financial statements and notes thereto, included as part of the financial statements, should be read in conjunction with these discussions.

The Company incurred a net loss for the three months ended September 30, 2007 of $637,215. This compares to a loss of $505,908 for the same period in 2006, an increase of $131,307. The increase is primarily the result of  higher operating expenses of $99,145 and lower revenue.

Operating expenses increased $99,145 to $634,237 from $535,092 during the same period in 2006. The increase is primarily the result of an increase of $70,207 in general and administrative expenses offset by lower product development expenses of $122,844 during the three months ended September 30, 2007. Non-cash stock compensation increased $90,780 related to general and administrative expenses and decreased $17,680 related to marketing expenses during the three months ended September 30, 2007 as compared to the same period in 2006.

The Company recorded revenue of $484 for the three months ended September 30, 2007 and $37,000 for the same period in 2006. These revenues were derived from royalties from licenses of the VuIT™ reader.

Comparison of the Year Ended December 31, 2006 to the Year Ended December 31, 2005

General. The following discussion and analysis explains trends in the Company’s financial condition and results of operations for the years ended December 31, 2006 and 2005. The consolidated financial statements and notes thereto included as part of the financial statements should be read in conjunction with these discussions.

The Company incurred a net loss for the twelve months ended December 31, 2006 of $2,559,170. This compares to a loss of $2,038,096 for the same period in 2005, an increase of $521,074, or 26%

The Company recorded revenues of $37,000 for the year ended December 31, 2006 compared to $2,672 for the year ended December 31, 2005. These revenues were derived from a pilot project with a major media content provider.

The increase in net loss is primarily the result of an increase in product development of $381,486, marketing costs of $501,833 and General expenses of $560,986 offset by a gain on debt restructure of $465,046.

Liquidity and Sources of Capital

As of December 31, 2006, the Company had a cash balance of $513,974, and $544,056 in total assets. The Company’s current liabilities decreased from $2,958,525 to $1,673,198. This decrease is due to the restructure of notes payable whereby the terms were modified and accrued interest was forgiven.  The Company’s notes payable with an aggregate principal balance of $1,135,000 was restructured pursuant to agreements whereby the old notes and terms were exchanged for new notes and new terms.  Under the agreements, accrued interest of $935,546 was forgiven, interest rates were reduced to 10% and maturity was extended to December, 2008.  In addition, accrued interest of $191,185 was combined with the outstanding principal balance of one of the old notes into a new note.

Net cash used by operations was $1,614,989 related to the costs and expense of generating business, which primarily consisted of fees to employees, software developers and repayments of accrued liabilities.  Net cash used by investing activities was $32,213 consisting of equipment purchases.  On August 24, 2006, the Company sold 7,399,799 shares of common stock together with warrants to purchase up to an additional 7,399,799 shares of common stock for an aggregate of $2,219,940. The warrants have an exercise price of $0.60 per common share and a term of five years.  Net cash provided by financing activities was $2,160,966 for the twelve months ended December 31, 2006 resulting from the sale of common stock, the issuance of notes payable, and loans from a related party.  Notes payable on demand of $925,000 bear an interest rate of 10% per annum due December 31, 2008 and notes payable of $360,659 bear an interest rate of 10% per annum due December 15, 2008.  The company issued certain short-term notes with an aggregate principle amount of $235,000 due within twelve months.  The company paid these notes along with interest of $5,000 in August 2006.

The Company has financed its operations primarily through the sale of its common stock, private and public debt and equity offerings and notes payable.

The Company believes that its cash needs for the next twelve months will be met by debt financings, loans from its directors, officers and shareholders, private placements of Company securities, subscription rights offerings to its shareholders and a potential initial public offering of shares on AIM. However, there can be no assurances that the Company will be successful in obtaining sufficient funds needed for the subsequent development of its business.  If the Company issues more shares of its common stock its shareholders may experience dilution in the value per share of their common stock.

The Company continues to investigate the availability, source and terms for external financing, but has not entered into any agreements at this time for such financing. The Company cannot assure funds will be available from any source, or, if available, that the Company will be able to obtain the funds on terms agreeable to it. Any additional debt the Company incurs could result in a substantial portion of its cash flows from operating activities, if any, being used for the payment of principal and interest on the indebtedness, and could render the Company more vulnerable to competitive challenges and economic downturns.

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Recent Financings

August 2006 Financing

In August of 2006 we offered and sold 7,399,799 shares (the “2006 Shares”), of common stock, $0.001 par value, together with warrants to purchase up to an additional 7,399,799 shares of Common Stock (the “2006 Warrants”; the 2006 Warrants and the 2006 Shares shall collectively be referred to as the “2006 Securities”) for an aggregate amount of proceeds of $2,229,940 (the “2006 Offering”). The 2006 Warrants have an exercise price of $0.60 per common share and a term of five years. The 2006 Securities were sold solely to accredited investors (the “2006 Purchasers”) in a private placement offering exempt from registration under the Securities Act.

In connection with the private placement, we entered into a Common Stock and Warrant Purchase Agreement (the “2006 Purchase Agreement”), dated as of August 24, 2006, with the 2006 Purchasers that contains customary representations, warranties and covenants. The 2006 Warrants contain customary provisions for adjustment to the exercise price in the event of stock splits, combinations and dividends, and include certain cashless-exercise provisions. The 2006 Warrants also contain anti-dilution adjustments to the exercise price and number of common shares issuable upon exercise in the event of certain dilutive issuances of equity securities.

In connection with the 2006 Offering, we entered into the 2006 Registration Rights Agreement with the 2006 Purchasers pursuant to which we agreed to file a registration statement with the Securities and Exchange Commission within 60 days of the closing and use commercially reasonable efforts to obtain effectiveness of the registration statement within 90 days after the filing date (subject to a 30 day extension if the registration statement is reviewed by the Securities and Exchange Commission). The registration statement was declared effective on February 14, 2007 and covers the resale of the 2006 Shares and the shares of Common Stock underlying the 2006 Warrants (the “2006 Warrant Shares”).  Our inability to satisfy certain covenants contained in the 2006 Purchase Agreement relating to registration rights resulted in our obligation to pay liquidated damages to the 2006 Purchasers and the placement agents which we satisfied by issuing shares of our common stock to them.

August 2007 Financing

On August 28, 2007, the Company entered into the 2007 Securities Purchase Agreement pursuant to which the Company sold (i) senior, secured convertible notes in the aggregate principal amount of $1,440,000 and warrants to purchase up to 21,920,833 shares of the Company’s common stock to the purchasers (the “2007 Purchasers”).

The 2007 Notes mature on March 28, 2008, unless extended by mutual agreement of the Company and the note holders. The holders of the 2007 Notes may convert 83.33% of any amounts outstanding  under the 2007 Notes at any time into shares of our common stock at a fixed conversion price per share of $0.10. We may convert 83.33% of any amounts of principal outstanding under the 2007 Notes at any time prior to repayment at a conversion price of per share $0.10 if the volume weighted average price of our common stock on the OTC Bulletin over any 10 consecutive trading days is $.60 or more per share. Our obligation under the 2007 Securities Purchase Agreement are secured by substantially all of our assets pursuant to a security agreement dated August 28, 2007 between the Company and a collateral agent designated by the 2007 Purchasers.

Under the 2007 Securities Purchase Agreement, we also issued to the 2007 Purchasers five-year warrants to purchase up to21,920,833  shares of our common stock at the exercise price of $0.20.

In connection with the 2007 Securities Purchase Agreement, we also entered into the 2007 Registration Rights Agreement with the 2007 Purchasers providing for the filing of a registration statement with the Securities and Exchange Commission registering a portion of the common stock issuable upon conversion of the notes and the exercise of the warrants. We caused the registration statement to be filed. In the event of a default of our obligations under the 2007 Registration Rights Agreement, if the registration statement is not declared effective within 90 days of filing (120 days if the registration statement is reviewed by the Securities and Exchange Commission), we are required to pay to the 2007 Purchasers, as liquidated damages, for each month that the

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registration statement has not been filed or declared effective, as the case may be, equal to 1.5% of the each holder’s subscription price (subject to a cap of 18% of such holder’s subscription price).

We have the right to convert all or a portion of the outstanding principal amounts under the 2007 Notes at any time prior to repayment if the volume weighted average price of our common stock on the OTC Bulletin over any 10 consecutive trading days is $.60 or more per share. In the event the Company elects to convert the 2007 Notes, the Company will issue to each holder that number of shares equal to the product obtained by dividing (a) 83.33% of the outstanding principal on the 2007 Notes by (b) $0.10 and repaying any outstanding interest in cash. The holders have the right to convert all or a portion of the outstanding principal and/or interest under their note. In the event, the 2007 holders elects to convert a 2007 Note, the Company will issue to such holder that number of shares equal to the product obtained by dividing (a) 83.33% of the outstanding principal and/or interest on their Note by $0.10.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

Auditor’s Opinion Expresses Doubt About The Company’s Ability To Continue As A “Going Concern”

The independent auditors report, dated March 29, 2007, on our December 31, 2006 financial statements included in this Registration Statement, states that due to the Company suffering recurring losses and having a net capital deficiency, this raises substantial doubts about the Company’s ability to continue as a going concern. If we are unable to develop our business, we have to discontinue operations or cease to exist, which would be detrimental to the value of the Company’s common stock. We can make no assurances that our business operations will develop and provide us with significant cash to continue operations.

which text is displayed on many different mediums. Rather than treat the display like a static piece of paper, the VuIT™ reader dynamically feeds text to the viewer. The Company believes that this automated presentation has the potential to substantially increase reading rate and improve comprehension in any language. Utilizing the software application words are then displayed one at a time, as large as desired, and at a rate of speed optimized for the individual reader. The system also incorporates the capability of personalizing, tracking and modifying the experience real-time. The Company has completed the development of multiple VuIT™ reader applications and production ready systems for the Push eMail and the Broadcast markets. The Company intends to develop the VuIT™ reader applications for Online deployments through Content Providers. Each VuIT™ reader product is designed to 1) improve the reading experience, 2) collect usage data and 3) position relevant matching data or enable contextual search. The difficulties of reading on electronic devices whether computers or mobile phones are well documented. The VuIT™ reader provides an important alternative to standard reading approaches allowing users to see text in a larger font and to read faster. A patent pending cadence system and a scrolling device mitigates problems reading on computer screens and mobile phones. By leveraging computer processing power users read faster with higher retention and less eye strain. There is anecdotal evidence the VuIT™ reader may assist people suffering from dyslexia and other reading disabilities.

Although currently optimized for English, the VuIT™ reader can be programmed to work with any language including non-Greek lettered languages as Chinese and Arabic. By programming the cadence engine for each language specific elements, opportunities exist to reach diversified and multiple mobile phone users throughout the world. The VuIT™ reader provides special opportunities for Kanji (Chinese characters), an intricate written language in which a single small stroke can change the meaning of a pictogram, text messaging and an email. These elements combined with a small screen explain the slow adoption of email and texting in China. Evidence from commercial prospects, including Motorola, suggest the VuIT™ reader may solve this problem allowing each pictogram to be presented individually on the screen large enough to be read easily.

The VuIT™ reader Reader, simple and elegant in concept, has vast potential for commercial exploitation. Internet and mobile advertising offers huge potential.

The Company is prosecuting ten patent applications and provisional patent applications for the VuIT™ reader and related methods of analysis, abstraction and delivery of electronic information in the United States and in Europe. The core of those patents is the unique and differentiating cadence technology. Additional technologies covered include the methods of controlling the system, using keys on computers, mobile phones, MP3 players and devices to monitor reading speed and cadence elements. While the Company’s products are not dependent on a single patent, there can be no assurances that any patent will be granted. See “Risk Factors.”

In November, 2004 the Company acquired QuantumReader, Inc. (“QR”) and the QR technology.

Marketing and Markets

The Company intends to fully exploit its initial software application for the VuIT™ reader, under the trade name the VuIT™ reader email Reader, to the push email mobile communications user market through global distributors, adjacent sales channels and embedded within the devices. Many of these sales partners are already in negotiation or in various stages of coordinated sale. However, there is a long sales cycle associated with the technology. The Company’s first product, the VuIT™ reader eMail Reader for BlackBerry is available through individual subscription and through enterprise deployment. It is the intent of the Company to penetrate the individual subscription model though device manufacturers and retail distributors throughout the world. Subsequent versions of enterprise and production-specific applications are designed to transition VuBotics into long-term licensing agreements of various reading, tracking, advertising and relational search products sets in each vertical. The Company has identified the following vertical markets for the VuIT™ reader Reading Systems:

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•                   Email

•                   Email Attachments

•                   Mobile Internet Content

•                   Mobile Messaging

There can be no guarantee the Company will either successfully develop or adapt the VuIT™ reader Reading System for these markets or, if the Company is successful in doing so, that these markets or any other markets will accept the product. Subsequent products may or may not be directed at similar markets through similar channels. Each marketing strategy will be appropriate for the size of the opportunity being generated. These market relationships are often complex and require time to develop at the right level of negotiation as is typical of business to business product sales cycles. Similar to the VuIT™ reader family of products, there is an expectation that once creditable levels of market awareness exist, the length of each cycle should shorten but there is no assurance of this.

In August, the Company entered into an agreement with Research In Motion of Waterloo, Ontario, the manufactures of BlackBerry products. While the alliance agreement was not structured to create near-term revenues for the Company, it has been instrumental in obtaining third party testing and validation of the VuIT™ reader eMail Reader for BlackBerry product. Such testing is required prior to distribution of applications on RIM products over the network. We believe that this alliance agreement will lead to near-term revenue producing opportunities through telecommunication carriers and application distributors of BlackBerry products.

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Research and Product Development

The Company has a significant commitment to research and product development. The Company’s research and product development efforts are focused on developing its core technological competentics. VuBotics has conducted extensive research in development of the VuIT™ reader reading systems and product platforms. During fiscal years 2005 and 2006, over $761,000 was spent on research and product development.

Patents, Trademarks and Proprietary Rights

The Company relies on a combination of patent, trade secret and trademark laws to establish its proprietary rights in its products. The Company has several patent applications and provisional patent applications pending in the United States and Europe for its inventions. The Company believes that the patents it has applied for may be useful in protecting the Company’s proprietary products.

VuBotics has applied for United States federal registration for a number of trademarks including its “VuBotics,” “the VuIT™ reader” and stylized “V” trademarks. Each of these trademarks is incorporated into our website, marketing collateral and market communications to maximize the Company’s efforts to brand itself and its products.

Vubotics is constantly developing proprietary technology that protects the intellectual portfolio of the company and positions it to maximize its licensing revenue. This technology has the potential for additional patent protection. The company will vigorously protect these inventions and continue to invest research funds to further the promotion of VuBotics’ interests in its exploited markets and promote the interests of VuBotics partners in creating other dimensions of use of the intellectual assets.

the date of the annual meeting is to be determined by the current Board of Directors.

The following information sets forth the backgrounds and business experience of the directors, executive officers and key employees:

PHILIP E. LUNDQUIST , Director - Mr. Lundquist has served as Chairman of the Board for the Company since January, 1999. From May 1, 2003 until November 27, 2007, he served as the Company’s chief executive officer and chief financial officer. He relinquished his roles as chief executive officer and chief financial officer effective November 28, 2007. From 1988 to the present he has served as President of Lundquist Advisory Company, a company which provided corporate finance advisory services. He has held management positions at Reynolds Securities, Montgomery Securities, Inc. and Alex Brown & Sons in Miami, San Francisco and Baltimore. [He serves as a director of Constellation Group, Inc.]  He was Director of Corporate Finance of Deloitte & Touche, Atlanta, Georgia. Mr. Lundquist graduated from Williams College with a bachelors degree in political science and economics in 1957. During 1962 to 1964, he attended the Institute of Investment Banking at the Wharton School of Business, University of Pennsylvania.

MARC OWENSBY,  Chief Executive Officer and Director – Mr. Owensby was appointed as a director of the Company on August 16, 2007 and appointed interim chief executive officer of the Company effective November 28, 2007. Mr. Owensby has served as the chief development officer of PT Code Jawa, a mobile software development firm based in Indonesia, since 2002. Prior to co-founding PT Code Jawa, Mr. Owensby was the chief executive officer of Spotcast Communications, Inc., a firm which specialized in mobile phone advertising and marketing technologies, from 1998 through 2001. From 1996 through 1998, Mr. Owensby served as Vice President of telecommunications for Lockheed Martin International. From 1990 through 1996, he served as director of business development for COMSAT Mobile Communications, Inc. Mr. Owensby holds a dual degree in Economics and History from the University of Wisconsin-Madison and a doctorate in law degree from the University of Wisconsin Law School.

JOHN F. ELLINGSON, President and Chief Operating Officer – John F. Ellingson serves as VuBotics’ President & Chief Operating Officer; previously he was the Chief Strategy Officer for the Company. Bringing over 20 years of experience in strategic consulting, Mr. Ellingson’s most recent prior position was U.S. National Manager of the Global Technology, Media & Telecommunications Business Innovation Group at Deloitte & Touche. His client base consisted primarily of Fortune 500 and international companies such as The Coca-Cola Company, General Motors, BMW, Daimler Chrysler, Lockheed-Martin, Intel, Microsoft, GE Capital, Motorola, IBM, Johnson & Johnson, Qualcomm (MediaFlo), Hutchison Whampoa, China Unicom, Huawei, SK Telecom, Global Crossing, Siemens, Bellsouth, Home Depot, and government entities such as NATO, the NSA and the Singagpore EDB. Mr. Ellingson graduated with dual Bachelor of Sciences/Bachelor of Arts degrees in Economics and Marketing from Temple University, and a Master of Business Administration in Economics and Finance from the Babcock School of Business at Wake Forest University. He is also an alumnus of the University of Southern California’s Center for Telecom Management Advanced Management Training and Massachusetts Institute of Technology’s Creating  Sustaining Innovative Organizations.

THOMAS C. RIDENOUR, Secretary and Interim Chief Financial Officer - Mr. Ridenour was appointed secretary and interim chief financial officer of the Company effective November 28, 2007; previously he had served as a consultant to the Company since May 2005. Prior to this, he served as Senior Vice President and Chief Financial Officer of Healthwatch, Inc. Before that, Mr. Ridenour was Senior Vice President and Chief Financial Officer of Nationwide Credit, Inc. Previous to that, he was Vice President and Chief Financial Office of Imaging Technologies Services, Inc. Before that, Mr. Ridenour was Vice President and Division Controller for American Security Group and served in various positions with Primerica Financial Services. Mr. Ridenour graduated with a Bachelor of Science degree in accounting from the University of South Carolina. He is a Certified Public Accountant and a member of the AICPA and the Georgia Society of CPAs.

RONAN A. HARRIS, Director - Mr. Harris was appointed as a director of the Company in 2000. In January 1999, Mr. Harris founded Aubyn Management Ltd. which specializes in developing new markets and business opportunities in Japan. From 1996 to January 1999 he was employed as a consultant for JJ International, a financial

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consulting firm. From December, 1993 to February, 1996 he was employed as an engineer at Mitsubishi Corporation. He graduated with honors from The University of Dublin with a degree in Electrical Engineering. Presently, Mr. Harris lives in Dublin, Ireland and is an executive with Google, Inc.

ROBERT T. ERAMIAN, Director - Mr. Eramian was appointed as a director of the Company in 2000. Mr. Eramian is Managing Director with Strategos Financial LLC, where he has been employed since 2005. Mr. Eramian works closely with Private Family Offices, Hedge Funds and Investment Advisors in his capacity as Managing Director at Strategos Financial, LLC.  From 2002 to 2005, Mr. Eramian was the National Sales Manager for the Philadelphia Financial Group.  From 2000 to 2002, Mr. Eramian handled offerings designed exclusively for high net worth clients while working at Deutsche Banc Alex Brown.  From 1994 to 2000, Mr. Eramian served as the Chief Executive Officer of Iatros Healthcare Corp.  Prior to 1994 Mr. Eramian worked as an Independent Consultant assisting two companies go from start-ups to being listed on the NYSE.  Mr. Eramian received his Bachelor of Arts from Merrimack College in 1966, his Master of Arts from Dayton University in 1967 and his Ph.D./ABD from Emory University in 1980.

RICHARD BARFIELD, Director - Mr. Barfield was appointed as a director of the Company effective December 3, 2007. Mr. Barfield serves as Chairman of ARC International plc and Executive Chairman of Square One Resources Limited.served as chief executive officer of Spring Group plc, an information technology staffing company, from March 2002 through September 2006. From June 2000 through February 2002, Mr. Barfield served as group finance director of Spring Group plc. Prior to joining Spring Group plc, Mr. Barfield was the finance director for several companies including BellSouth Corporation, Northgate Information Solutions plc, and Smith Kline Beckman. Mr. Barfield holds a Bachelor of Arts degree from King’s College in London and is a Fellow of the Royal Society of Arts (FRSA), a Fellow of the Institute of Chartered Accountants (FCA), and a Chartered Accountant (ACA).

Family Relationships

There are no family relationships among any of the officers or directors of the Company.

Board and Board Committees

The following person’s serve as members of the Board of Directors:  Philip E. Lundquist (Chairman), Robert T. Eramian, Ronan A. Harris and Marc Owensby. Richard Barfield will serve as a director of the Company effective December 3, 2007.

At this time, the Board has no committees. The Board anticipates that it will form audit, nominating and compensation committees in the near future.

Code of Ethics

The Company adopted a Code of Ethics (the “Code of Ethics”) applicable to the Company’s principal executive, financial and accounting officer and persons performing similar functions. In addition, the Code of Ethics applies to the Company’s employees, officers, directors, agents and representatives.  The Company’s Code of Ethics is intended to comply with the rules and regulations of the Securities and Exchange Commission and the rules of the NASDAQ Stock Market.  The Code of Ethics is available, at no cost, from the Company upon written request to Philip E. Lundquist, Chief Executive Officer of VuBotics, Inc., 235 Peachtree Street NE, Suite 1725, Atlanta, Georgia 30303, and a copy is annexed as Exhibit 14 to the Company’s Annual Report filed on Form 10-KSB with the SEC on March 31, 2006.

Company. The table set forth below summarizes the compensation paid to our directors for the fiscal year ended December 31, 2006.

(1)           Robert Eramian was awarded 50,000 shares of restricted common stock valued at a market price of $0.25 on February 20, 2006.

(2)           Ronan Harris was awarded 100,000 shares of restricted common stock valued at a market price of $0.25 on June 9, 2006.

(3)           Marc Owensby was appointed a director of the Company in August 2007.

(4)           Roy Dantzman resigned as a director of the Company in December 2006.

CORPORATE GOVERNANCE

Board Determination of Independence

Our Board of Directors has determined that Messrs. Harris and Eramian are each “independent” as that term is defined by the National Association of Securities Dealers Automated Quotations (“NASDAQ”).  Under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have

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not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $60,000 during the current or past three fiscal years;  (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organizations consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Vubotics has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Vubotics’ outside auditor. In addition, a director who is, or at any time during the past three years, was employed by the Company or by any parent or subsidiary of the Company, is not deemed to be independent by our Board of Directors. Philip Lundquist is not deemed to be “independent” because he has been employed by the Company as its Chief Executive Officer over the past three years. Marc Owensby is not deemed to be “independent” because he serves as the Interim Chief Executive Officer.

Board of Directors Meetings and Attendance

The Board of Directors has responsibility for establishing our broad corporate policies and reviewing our overall performance rather than day-to-day operations. The primary responsibility of our Board of Directors is to oversee the management of our Company and, in doing so, serve the best interests of the Company and our shareholders. The Board of Directors selects, evaluates and provides for the succession of executive officers and, subject to stockholder election, directors. It reviews and approves corporate objectives and strategies, and evaluates significant policies and proposed major commitments of corporate resources. Our Board of Directors also participates in decisions that have a potential major economic impact on our Company. Management keeps the directors informed of Company activity through regular communication, including written reports and presentations at Board of Directors and committee meetings.

We have no formal policy regarding director attendance at the annual meeting of shareholders, although all directors are expected to attend the annual meeting of shareholders if they are able to do so. The Board of Directors has held 9 meetings in 2007 thus far which were all held telephonically. During 2007 the Board has held numerous additional telephonic meetings on an informal basis.

(1) With the exception of reimbursement of expenses incurred by our named executive officers during the scope of their employment and stated stock award amounts, none of the named executives received any other compensation, perquisites, personal benefits in excess of $10,000.

(2) Mr. Lundquist relinquished his roles as Chief Executive Officer and Chief Financial Officer of the Company effective November 28, 2007. He continues to serve as Chairman of the Company.

(3) Mr. Lundquist received the following restricted stock awards during the 2006 fiscal year in consideration for his services as the CEO, CFO, President, Chairman, Treasurer and Secretary of the Company for 2005 and 2006 fiscal years: (i) 1,100,000 shares of Common Stock on April 11, 2006 valued at $0.25 per share for a total compensation of $275,000. The Company’s board of directors approved the award in light of believing that total consideration of $275,000 was a fair estimate of the amount of compensation that should have been granted to Mr. Lundquist for his services to the Company during 2005 fiscal year and as of April 11, 2006 for the 2006 fiscal year, and that the price of $0.25 per share was a fair value of our common stock on April 11, 2006, despite no trading activity being recorded as of that date; (ii) 342,000 shares of Common Stock on June 9, 2006 valued at $0.25 per share for a total compensation of $85,300. The Company’s board of directors approved the award in light of believing that total consideration of $85,300 was a fair estimate of the amount of compensation that should be granted to Mr. Lundquist for his services to the Company from April 11, 2006 to June 9, 2006 for the respective portion of 2006 fiscal year. The respective grants of common stock of the Company to Mr. Lindquist vested immediately on each date of the grants.

(4) During the fiscal year ended December 31, 2005, the Company issued Mr. Lunquist 900,000 shares of its Common Stock valued at $0.10 per share for a total compensation of $90,000, 200,000 shares valued at $0.10 per share for a total compensation of $20,000 and 200,000 shares of its Common Stock for a total compensation of $50,000; thereby, resulting in a total compensation of $160,000 during 2005 fiscal year, in consideration for his services as the CEO, CFO, President, Chairman, Treasurer and Secretary of the Company.

(5) During the fiscal year ended December 31, 2004, the Company issued Mr. Lundquist 2,500,000 shares of its Common Stock valued at $0.10 per share for a total compensation of $250,000, in consideration for his services as the CEO, CFO, President, Chairman, Treasurer and Secretary of the Company.

(6) Effective as of December of 2006, Mr. Craig Larson resigned as our Chief Scientist and a director of the Company.

(7) Mr. Larson’s annual compensation for the fiscal years ended 2006 and 2004 did not exceed $100,000..

(8) Mr. Owensby was appointed Interim Chief Executive Officer of the Company effective November 28, 2007. The Board of Directors has not yet determined his compensation for serving in this position.

(9) Mr. Ridenour was appointed Secretary and Interim Chief Financial Officer of the Company effective November 28, 2007. The Board of Directors has not yet determined his compensation for serving in these positions.

We do not have either (i) a plan that provides for the payment of retirement benefits, or benefits that will be paid primarily following retirement, including, but not limited to tax-qualified defined benefit plans, supplemental executive retirement plans, tax-qualified defined contribution plans and nonqualified defined contribution plans, nor (ii) any contract, agreement, plan or arrangement, whether written or unwritten, that provides for payment(s) to any of our named executive officers at, following, or in connection with the resignation, retirement or other termination of any of our named executive officers, or in connection with the change in control of our company or a change in any of our named executive officers’ responsibilities following a change in control, with respect to each of our named executive officers.

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Outstanding Equity Awards At Fiscal Year-End

The following table sets forth information concerning unexercised options; stock that has not vested; and equity incentive plan awards for each of our named executive officers outstanding as of the end of our fiscal year ended December 31, 2006.

(1)           Craig J. Larson resigned as the Chief Scientist and a director of the Company effective as of December 13, 2006.

Employment Agreements with Executive Officers

We have no employment agreements or service agreements with any of our executive officers. However, we may enter into service agreements with certain executive officers in the near future.

1,000,000 shares of our Common Stock valued at $0.20 per share in lieu of repayment of a previous loan in the amount of $200,000 made by Mr. Lundquist to us, (ii) on March 31, 2006, we issued 690,483 shares of our Common Stock valued at $0.25 per share in lieu of repayment of a previous loan in the amount of $172,621 made by Mr. Lundquist to us, and (iii) on June 9, 2006, we issued 258,000 shares of our Common Stock valued at $0.25 per share in lieu of repayment of a previous loan in the amount of $64,700 made by Mr. Lundquist to us. Furthermore, with the exception of our Board of Directors approving the repayment of these loans in shares of our common stock believing that these loans are commercially reasonable and no less favorable to us than we could have obtained from an unaffiliated third party on an arm’s length basis, we have not entered into any formal agreements with Mr. Lundquist encompassing the aforementioned repayments of loans made. As of December 31, 2006, the outstanding amount of the loans made by Mr. Lundquist to us is $75,985.

In November, 2004, we acquired QuantumReader, Inc. (“QR”), pursuant to the acquisition of all of the issued and outstanding stock of QR in a stock for stock transaction. The transaction was valued at $102,574 with $2,574 being allocated for liabilities assumed and 1,000,000 shares of the Company’s common stock issued for the technology of QR. As part of the acquisition, all intellectual property rights held by the developers of the QR technology were assigned to QR. The Quantum-Reader and its related technologies were initially created by Craig Larson, our then Chief Scientist and director. As part of the purchase of QR, we entered into an agreement with Ekistics Research, LLC (“Ekistics”), an entity controlled by Mr. Larson obligating us to pay Ekistics $135,900 for the industrial design and engineering services that were provided in 2005. During the fiscal year ended December 31, 2006, we paid $73,976 to Ekistics, for the industrial design and engineering services provided to us during the 2006 fiscal year. Effective December 13, 2006, Mr. Larson resigned as our Chief Scientist and director.

There have not been any other transactions or proposed transactions during the fiscal years ended December 31, 2006, 2005 and 2004, to which we were or are to be a party, in which our officers, directors or nominees had or are to have a direct or indirect material interest.

* Represents less than 1%.

** Assumes that all beneficially owned securities will be sold.

* Less than 1%.

(1)           Assumes that all securities registered will be sold.

(2)           Applicable percentage ownership is based on 52,773,718 shares of common stock outstanding as of November 15, 2007, together with securities exercisable into shares of common stock within 60 days of November 15, 2007 for each stockholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.  Shares of common stock that are currently exercisable or exercisable within 60 days of November 15, 2007 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(3)           Not all shares issuable upon exercise of the 2007 Notes and 2007 Warrants have been registered hereunder.

[Footnotes 4-43 to come]

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